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An econometric analysis of factors of attracting foreign direct investment to developing countries

Vol. 16, Iss. 1, JANUARY 2017

PDF  Article PDF Version

Received: 5 October 2016

Received in revised form: 17 October 2016

Accepted: 2 November 2016

Available online: 27 January 2017

Subject Heading: MATHEMATICAL METHODS AND MODELS

JEL Classification: С15, С51

Pages: 188-200

https://doi.org/10.24891/ea.16.1.188

Bazhenov O.V. Ural Federal University named after the First President of Russia B.N. Yeltsin, Yekaterinburg, Russian Federation
6819@list.ru

Zasukhina E.A. OOO Unilever Rus, Yekaterinburg, Russian Federation
e.a.zasukhina@gmail.com

Importance Modern trends in economic development are characterized by increasing competition, globalization of markets and concentration of capital. Foreign direct investment (FDI) plays a significant role in the economic development of developing countries. Evaluation of the influence of foreign capital on the host country was considered by the community of domestic and foreign researchers, however, the issue remains controversial.
Objectives The aim of the study is to identify and assess the factors of attracting FDI to developing countries.
Methods We used methods of comparative analysis and synthesis of available information, the content analysis of analytical materials of leading Russian and foreign publications over the past decade on the issue of determining the factors influencing the amount of FDI. On the basis of statistics on 19 developing countries, we built an econometric model to assess the impact of factors on the net inflow of foreign direct investment.
Results The paper identifies two groups of factors influencing the amount of foreign direct investment. i.e. macroeconomic factors and factors that characterize the development of the society. We present and describe an econometric model that takes into account and assesses the influence of factors on the net inflow of foreign direct investment.
Relevance The results obtained can be used by legislative and executive authorities for investment policy development.

Keywords: foreign direct investment, developing countries, investment attractiveness, econometric model, factor analysis

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